U.S. stock futures lower as commodity price fears linger

By Daniel | May 13, 2008

LONDON (MarketWatch) - U.S. stock futures dropped on Tuesday, with commodity
prices again in the spotlight even as crude-oil futures softened a bit, as
speakers from the Cleveland Fed president to top executives of Coca-Cola and
Wal-Mart Stores highlighted inflationary pressures.

S&P 500 futures dropped 5.2 points to 1,399.50 and Nasdaq 100 futures fell 4
points to 1,994.50. Dow industrial futures fell 39 points.

U.S. stocks were coming off a strong performance on Monday, when a drop in crude
oil futures and M&A speculation drove the Dow industrials up 130 points, the
Nasdaq Composite up 42 points and the S&P 500 up 15 points.

The economic calendar includes seven Federal Reserve speeches, including one from
Fed Chairman Ben Bernanke in Atlanta on the central bank’s liquidity measures.

Cleveland Fed president Sandra Pianalto said inflation is a key risk to her
outlook, but Fed strategy is compatible with a stable inflation rate.

There’s also retail sales and import prices for April, both of which will be
released at 8:30 a.m. Eastern. Business inventories figures are due at 10 a.m.
Eastern.

France’s Credit Agricole became the latest financial to try to shore up its
balance sheet, saying it’s planning to raise over $9 billion by issuing
discounted stock. American International Group (AIG), which last week announced
plans to raise $12.5 billion, priced two offerings at a combined $11.9 billion.

Write-downs also were announced by France’s Societe Generale and Britain’s
Alliance & Leicester.

The dollar was mostly higher against rivals. Crude-oil futures edged 42 cents
lower to $123.81 a barrel. Gold futures fell $5.30 to $879.60 an ounce.

Wal-Mart Stores (WMT) reported a 7% profit rise, slightly topping analyst
estimates, as international growth and penny-pinching U.S. consumers seeking
value bolstered the bottom line. Second-quarter earnings were estimates at
between 78 and 81 cents a share, compared to analyst estimates of 80 cents a
share.

Wal-Mart slipped 2.2% in pre-open trade.

Coca-Cola’s (KO) president, Muhtar Kent, said Tuesday the fizzy drinks icon plans
to keep a tight lid on costs and keep snapping up small-sized juice and water
companies to try to offset a flat U.S. market. Speaking in Tokyo, Kent said the
factors behind commodity price rises are here to stay: high oil pries, poor
weather, the growth of ethanol production for non-food purposes, and rising
demand in emerging markets.

Elsewhere, Toll Brothers (TOL) reported a 30% drop in second-quarter
home-building revenue and said it’s looking to use its $2.5 billion of available
capital to make acquisitions.

Hewlett-Packard (HPQ) said it’s going to buy EDS (EDS) for $13.9 billion, or $25
a share. The deal was expected after a report of talks on Monday in The Wall
Street Journal.

In another deal that was speculated upon, Italy’s Finmeccanica said it’s going to
buy DRS Technologies (DRS) for $5.2 billion, or $81 a share.

Staples (SPLS) lifted its hostile offer for Dutch office supplies group Corporate
Express (CXP) to 8 euros ($12.43) a share.

Tyco Electronics (TEL) is selling its radio frequency components business M/A-Com
to Britain’s Cobham for $425 million.

Though the Shanghai Composite dropped 1.8% after the earthquake in Sichuan
province, most other Asian markets rose, with the Nikkei 225 up 1.5%. Europe
stocks gave up early gains, with the FTSE 100 down 0.8% in London.

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